What is the story about?
The year has barely begun, and America’s job market is already flashing warning signs. According to a report by Challenger, Gray & Christmas, US-based employers announced 1,08,435 layoffs in January, marking a 118 per cent increase compared to the same month last year.
That’s more than double the 35,553 cuts reported in December and the highest January total since 2009, when the world was reeling from the financial crisis.
“Leaders are openly discussing AI, many want to implement it in operations, and the market appears to be rewarding companies that mention it,” said Challenger, noting that AI is becoming a factor in corporate decisions, whether as a direct cause or as a convenient narrative for investors.
The pain was spread unevenly across industries, with some sectors facing much deeper cuts than others. The transportation industry saw the biggest blow, announcing 31,243 job cuts, primarily due to UPS slashing 30,000 jobs after ending its partnership with Amazon.
The technology sector, which has been under pressure for months, followed closely with 22,291 job cuts in January. Amazon once again dominated the headlines, eliminating 16,000 positions as part of an internal restructuring drive. Challenger noted that while Amazon’s CEO Andy Jassy has acknowledged that AI will cost jobs in the coming years, the latest cuts appear “driven more by overhiring and management consolidation than by automation.”
Healthcare also faced significant layoffs, with 17,107 job cuts, the highest in the sector since the early pandemic months of 2020. Hospitals and health product manufacturers cited inflation, high labour costs, and lower reimbursements from Medicaid and Medicare as the main culprits. Some providers have resorted not only to cutting staff but also to freezing pay and reducing benefits.
Even chemical manufacturers joined the wave, with 4,701 cuts, largely from Dow Inc., which blamed a strategic shift toward automation and AI adoption. It was the largest monthly loss for the sector since 2016, when Dow merged with DuPont.
In contrast, the media industry saw a comparatively small number of layoffs, 510 cuts, down 18 per cent from a year ago. News outlets, a subset of that category, recorded only 65 job losses, their lowest January total since 2022.
When it came to reasons for layoffs, contract losses topped the list with 30,784 cuts, followed by market and economic conditions at 28,392, and restructuring efforts at 20,044. Store or department closures accounted for 12,738 job losses.
Artificial intelligence, however, made its presence felt. It was directly cited as a cause for 7,624 job cuts, about 7 per cent of the month’s total. Since 2023, companies have attributed 79,449 layoffs to AI, a relatively small but rapidly growing share.
“While it’s hard to measure AI’s direct impact, the technology’s growing footprint is clear,” the Challenger report said. “Executives know investors are watching, and many are signalling automation readiness.”
Tariffs, by comparison, played a negligible role, responsible for only 294 job cuts, down sharply from 7,900 last year.
Meanwhile, hiring plans hit a record low for January, with companies announcing just 5,306 new positions, the weakest start to the year since Challenger began tracking in 2009. That’s down 49 per cent from December and 13 per cent from January 2025.
While AI isn’t yet the main culprit behind this year’s job cuts, its shadow looms large. The technology that promises efficiency is also stoking fears about the future of work, and as January’s numbers show, those anxieties are no longer theoretical.
That’s more than double the 35,553 cuts reported in December and the highest January total since 2009, when the world was reeling from the financial crisis.
“Leaders are openly discussing AI, many want to implement it in operations, and the market appears to be rewarding companies that mention it,” said Challenger, noting that AI is becoming a factor in corporate decisions, whether as a direct cause or as a convenient narrative for investors.
Tech, transport and healthcare lead the layoff wave
The pain was spread unevenly across industries, with some sectors facing much deeper cuts than others. The transportation industry saw the biggest blow, announcing 31,243 job cuts, primarily due to UPS slashing 30,000 jobs after ending its partnership with Amazon.
The technology sector, which has been under pressure for months, followed closely with 22,291 job cuts in January. Amazon once again dominated the headlines, eliminating 16,000 positions as part of an internal restructuring drive. Challenger noted that while Amazon’s CEO Andy Jassy has acknowledged that AI will cost jobs in the coming years, the latest cuts appear “driven more by overhiring and management consolidation than by automation.”
Healthcare also faced significant layoffs, with 17,107 job cuts, the highest in the sector since the early pandemic months of 2020. Hospitals and health product manufacturers cited inflation, high labour costs, and lower reimbursements from Medicaid and Medicare as the main culprits. Some providers have resorted not only to cutting staff but also to freezing pay and reducing benefits.
Even chemical manufacturers joined the wave, with 4,701 cuts, largely from Dow Inc., which blamed a strategic shift toward automation and AI adoption. It was the largest monthly loss for the sector since 2016, when Dow merged with DuPont.
In contrast, the media industry saw a comparatively small number of layoffs, 510 cuts, down 18 per cent from a year ago. News outlets, a subset of that category, recorded only 65 job losses, their lowest January total since 2022.
AI, contracts and cost cuts drive decisions
When it came to reasons for layoffs, contract losses topped the list with 30,784 cuts, followed by market and economic conditions at 28,392, and restructuring efforts at 20,044. Store or department closures accounted for 12,738 job losses.
Artificial intelligence, however, made its presence felt. It was directly cited as a cause for 7,624 job cuts, about 7 per cent of the month’s total. Since 2023, companies have attributed 79,449 layoffs to AI, a relatively small but rapidly growing share.
“While it’s hard to measure AI’s direct impact, the technology’s growing footprint is clear,” the Challenger report said. “Executives know investors are watching, and many are signalling automation readiness.”
Tariffs, by comparison, played a negligible role, responsible for only 294 job cuts, down sharply from 7,900 last year.
Meanwhile, hiring plans hit a record low for January, with companies announcing just 5,306 new positions, the weakest start to the year since Challenger began tracking in 2009. That’s down 49 per cent from December and 13 per cent from January 2025.
While AI isn’t yet the main culprit behind this year’s job cuts, its shadow looms large. The technology that promises efficiency is also stoking fears about the future of work, and as January’s numbers show, those anxieties are no longer theoretical.
